Monday saw a recovery in oil prices as supply issues remained following Washington’s two-week-long sanctions on Russia’s energy industry for the conflict in Ukraine. After dropping 0.62% the day before, Brent crude futures increased 34 cents, or 0.4%, to $81.13 a barrel.
After finishing down 1.02% on Friday, U.S. West Texas Intermediate crude, which expires on Tuesday, was up 59 cents, or 0.8%, at $78.47 a barrel. At $77.75 a barrel, the more active April contract increased 36 cents.
Following the Biden administration’s sanctions against over 100 tankers and two Russian oil producers, both contracts saw weekly gains of over 1% last week, marking their fourth consecutive week of upward movement. This resulted in a global rush for ship supplies as Russian and Iranian oil traders look for unapproved tankers to transport their load, and a scramble by big importers China and India for timely oil shipments.
Backwardation is a market structure that indicates constrained supply when immediate prices are greater than those in subsequent months.
On Monday, the WTI spread was up 17 cents to 66 cents per barrel, while the prompt Brent monthly spread extended in backwardation by 2 cents to $1.24 per barrel.
Oil’s advances were restrained by a reduction in Middle East conflict.
Following 15 months of conflict, Israel and Hamas exchanged hostages and prisoners on Sunday, the first day of a ceasefire.
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